Nintendo: Layoffs not needed for profitability

President Satoru Iwata says letting staffers go could boost short-term results, but would be problematic in the long run.

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Layoffs could help Nintendo boost short-term results, but would hurt overall company morale and are not needed to hit financial targets, according to Nintendo president Satoru Iwata.

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"Regarding why we have not reduced the number of the personnel, it is true that our business has its ups and downs every few years, and of course, our ideal situation is to make a profit even in the low periods, return these profits to investors and maintain a high share price," Iwata said during a recent shareholder meeting.

"I believe we should continue working toward this ideal. If we reduce the number of employees for better short-term financial results, however, employee morale will decrease, and I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world."

"I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world."

Iwata said he is confident that Nintendo can become profitable under its current business structure due to exchange rate trends and a belief that its platforms will become more popular in the future. The Wii U has struggled thus far, selling 3.45 million systems to date, below company sales projections.

Iwata explained that the "valuable contributions" Nintendo employees make to the company are too important to lose for short-term benefits.

"I also know that some employers publicize their restructuring plan to improve their financial performance by letting a number of their employees go, but at Nintendo, employees make valuable contributions in their respective fields, so I believe that laying off a group of employees will not help to strengthen Nintendo’s business in the long run," he said. "Our current policy is to achieve favorable results by continuously cutting unnecessary expenses and increasing business efficiency."

Elsewhere during the shareholder meeting, Mario and Zelda creator Shigeru Miyamoto said Nintendo underestimated the scale of high-definition game development for Wii U, resulting in software delays.

"When it comes to the scale of software development, Wii U with HD graphics requires about twice the human resources than before. Please allow me to explain that we may have underestimated the scale of this change and as a result, the overall software development took more time than originally anticipated just as we tried to polish the software at the completion phase of development," Miyamoto said.

"However, we are almost out of this phase, and we are also trying to create something unique utilizing an easier development approach called 'Nintendo Web Framework.'"

Iwata later explained that the Nintendo Web Framework is a system Nintendo recently established to expedite and simplify Wii U game development.

Nintendo has a number of marquee first-party Wii U titles in the pipeline, including Mario Kart 8, Super Mario 3D World, Donkey Kong Country: Tropical Freeze, and an all-new Zelda game, among others.

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